Your car is like your baby. You want to look after it, protect it from every potential danger, and nurture it for as long as you decide to keep it. In spite of so much security and protection, incidents on roads will happen. For all these unforeseen moments, you will be glad that you have a solid car insurance policy to back you up.
That said, what do you do in a scenario where your beloved car is damaged beyond repair or is stolen?
Don’t lose hope right away as you, fortunately, have Return of Invoice, better known as RTI as an add-on cover.
What Is RTI In Car Insurance?
RTI is an add-on cover offered with a comprehensive car insurance plan. This can only be availed by vehicles that are new or are less than five years old. If the car is stolen or suffers irreparable damage, the insured customer has the right to claim full compensation equal to the invoice value of the car.
Benefits of RTI Add-on Cover
RTI add-on cover has a number of benefits-
- Full Reimbursement of Invoice Value: Ensures you get back the complete amount spent on purchasing the car, including taxes and registration fees.
- Protection Against Depreciation: Shields policyholders from the impact of depreciation, which reduces the car's market value over time.
- Financial Security: Helps maintain financial stability by covering the gap between market value and the original price.
- Convenience in Replacement: This enables you to replace your stolen or damaged vehicle without incurring significant additional costs.
How Does Return To Invoice Cover Work?
Having the RTI option is an investment that can help safeguard your back, especially when financial liabilities are high. By bridging the gap between the vehicle and its Insured Declared Value and the actual invoice value, you are liable to be reimbursed for the total ‘On-road’ price of the vehicle you paid when you purchased it.
When Is The Return To Invoice Cover Applicable?
Having the RTI option is an investment that can help in safeguarding your back especially in situations where the financial liabilities are high. By bridging the gap between the vehicle and its Insured Declared Value and the actual invoice value, you are liable to be reimbursed for the total ‘On-road’ price of the vehicle that you paid when you purchased it.
Generally, the RTI cost is approximately 10% more than a comprehensive car insurance plan.
Remember that insurance providers offer RTI as an add-on for vehicles until they reach an age limit that has been predefined before.
When Is The RTI Cover Not Applicable?
The Return to Invoice option is not applicable in all situations. So, when you have a dent in your car, it needs repairing, or if your windshield has a crack on it, you do not need to bank on RTI for compensation. Own Damage Cover or other add-ons like Zero Depreciation can handle these partial losses.
RTI should only be used to recover substantial financial loss as a result of irreparable car damage or if there has been a case of theft where the vehicle is no longer recoverable.
How To Calculate RTI?
You will be paying the ‘On Road’ price when you opt to buy a new car. This typically comprises of the Ex-Showroom Price Plus the Road Tax. Plus, you are also liable to pay Registration Charges, the amount of which is determined by the make or class of your car. Add everything together and you end up with an IDV figure which is less than what you initially paid.
Having an RTI as an additional cover ensures that your IDV is the same as the ‘On Road’ price that you paid. What this translates into is that if your car is stolen or damaged beyond repair, you can claim the original price as compensation that you paid for the car at the time of purchase.
On the other hand, if you choose to raise the claim under Total Loss / Constructive Total Loss or Total Theft of your car insurance plan, the insurer will compensate you with the lower of any one of these two values:
- Ex-showroom price Road tax Registration charges at the time of purchase
- In case the same model is available, then the present replacement price of the vehicle would be -> Ex-showroom price+Road tax+ Registration charges
How Much Does Return To Invoice Cost?
The cost of an RTI add-on varies based on:
- The car’s make and model.
- The insurer’s premium structure.
Generally, the RTI cost is approximately 10% more than a comprehensive car insurance plan. Remember that insurance providers offer RTI as an add-on for vehicles until they reach an age limit that has been predefined before.
Who Should Opt For A Return To Invoice Protection Cover?
RTI is particularly beneficial for:
- New Car Owners: Protects the significant investment made in a new vehicle.
- Vehicles in High-Theft Areas: Essential for residents owning cars in regions prone to vehicle theft.
- Cars in Calamity-Prone Zones: Provides financial security to individuals owning cars in areas susceptible to natural disasters.
- Expensive Cars: Ideal for luxury and high-value vehicles where depreciation is steep.
Validity of RTI
Since the add-on comes with a limited shelf life, you cannot bank on it forever. Usually, after some of your policy renewals in the first few years, your insurance provider will withdraw this benefit. This is because paying the ‘On Road’ price for an aged vehicle will convert into a financial loss for the insurance provider. The value will, of course, be more than the current market price of the car, especially if the vehicle has experienced significant wear and tear over the years.
That said, when you do raise a claim with RTI, the insurer is legally bound to pay the invoice cover in full. There are really no loopholes for evasion of any one of the charges, including one-road price, registration costs, road tax, dealer’s handling, etc., that can be bypassed in any way.
They may also offer compensation of a specific amount which is in exclusion of the car’s showroom price as mentioned in the original invoice.
Which of The Add-on Covers Is Better: ZERO Depreciation Or RTI?
Under usual circumstances, your maximum claim is limited to the IDV of the vehicle. On the other hand, RTI is a top-up option that can be used to cover the difference between the Insured Declared Value and the Invoice Value of the vehicle.
To put things into perspective, due to the annual depreciation of your car, IDV will always be less than the invoice value of your vehicle. With an RTI option in place, you can get the current on-road price. That means, even if there has been depreciation, it does not apply to you. If you want comprehensive coverage for repairs, Zero Depreciation is better. However, for maximum financial security against total loss, RTI is the superior choice. Depending on your priorities, you may even opt for both.
Things To Remember About Return To Invoice Cover
A few things to keep in mind when choosing Return to Invoice cover are-
- Limited Availability: Offered only for cars up to 3–5 years old.
- Annual Renewal: This must be renewed along with the base policy to remain active.
- Premium Increase: Adds to the overall cost of your insurance premium.
- Exclusions: Not applicable for third-party policies or partial damages.
- Invoice Retention: Keeping the car’s purchase invoice is crucial for claims.
FAQs on RTI
- Will there be deductions during claiming RTI?
A claim under RTI may not reimburse the full amount of your car invoice. The claim amount depends upon the terms of the policy, and it is advisable to talk to the insurer to understand the claim process.
- Can RTI cover be bought for cars older than 3 years?
Yes, you can purchase RTI cover for a car older than 3 years if the insurance provider allows it.
- Are accessories covered under RTI?
No, additional costs, such as car accessories, are not covered by RTI.
- Are minor accidents covered by RTI?
No, minor damages to the vehicle are not covered by RTI.
- What is the difference between RTI and IDV?
RTI or return to invoice is an add-on in car insurance, while IDV or insured declared value is the current market price of a vehicle declared by the owner.
- Is RTI better than IDV?
No, the importance of both covers depends upon the situation, and both provide useful coverage to the vehicle and its owner.
- When can I buy an RTI add-on?
You can purchase RTI add-ons while buying car insurance online. Alternatively, you can get this coverage while renewing your policy for a car that is no more than 3 to 5 years old.
- Can I buy another add-on if I have purchased RTI?
Yes, you can modify your policy by purchasing as many add-ons as your insurer allows.
- Is RTI cover worth it?
The value of RTI cover for your car insurance depends upon your financial needs, vehicle age and model, and the total cost of your insurance policy. Chat with the insurance provider and decide whether you need the add-on or any other riders to make your car insurance more comprehensive.
Conclusion
Return to Invoice is an add-on available with your comprehensive car insurance cover that plays a key role in saving you from receiving a claim amount much lower than the car's purchase value. While it comes with additional costs, its benefits far outweigh the expense. Carefully evaluate your needs and circumstances to decide if RTI is the right choice.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.